As the U.S. energy storage system (ESS) market grows rapidly, concern is rising that the market could take a short-term hit as a push gathers pace to reduce reliance on Chinese-made batteries. Batteries store power from renewable energy sources such as solar and wind, whose output is not constant, helping improve grid stability and reliability and cut greenhouse gas emissions.

MIT Technology Review reported on Sept. 10 that the rapid growth of the U.S. energy storage market has relied significantly on Chinese-made batteries that are competitive on price. The United States is moving to restructure supply chains to reduce dependence on China for key energy technologies.

Most recently, in late August the Trump administration declared a national emergency and issued an executive order banning the installation of "foreign-made bulk-power system electric equipment" that could pose national security risks. The order includes battery energy storage systems (BESS) as well as inverters and transformers. The move effectively restricts the use of Chinese-made batteries in grid-scale energy storage systems.

The United States has previously used tax credits and tariffs to reduce reliance on Chinese-made batteries. A tax credit included in the 2022 Inflation Reduction Act (IRA) imposed conditions on where battery minerals are mined, processed and recycled, and where batteries and components are assembled.

The tax credit system was overhauled in 2025, but its direction was maintained. Under a new law, from 2026, 55 percent of the material costs used in new energy storage projects must be sourced from regions other than China and other restricted countries to qualify for the tax credit. Import tariffs on batteries were also raised to 25 percent from 7.5 percent in January.

The executive order is seen as tougher than previous measures. Shan Tomouk (샨 토묵), head of energy storage and energy at Benchmark Mineral Intelligence, said, "A full ban was somewhat unexpected and is increasing concerns among operators in the United States."

BloombergNEF analysed that the measures could slow the rollout of grid-connected energy storage projects in the short term. It said projects could be delayed until developers confirm detailed rules.

With the U.S. Department of Energy expected to issue detailed guidelines by year-end, some projects may have to switch battery cell suppliers to U.S.-made products or imports from other countries, depending on the guidance. Isshu Kikuma (이슈 키쿠마), an energy storage analyst at BloombergNEF, said such alternative supply is likely to be more expensive than Chinese-made products, adding, "In the worst case, projects could be cancelled."

The executive order technically also applies to existing energy storage facilities. Still, analysts say it is unlikely that facilities already in operation would be forced off the grid solely because of the batteries' country of origin. Kikuma explained that most energy storage facilities in the United States currently use Chinese-made batteries, so applying the order as written could mean most installed battery storage facilities would have to be removed from the grid.

In the long term, the United States could secure production capacity to meet its own battery demand. The United States could have the required production capacity around 2030, but if some factories fail to ramp up utilisation as planned, the point when domestic supply actually meets demand could be pushed back to the late 2030s.

New plants by LG Energy Solution, Samsung SDI, Ford and SK On are set to start operations or expand production capacity by next year. A slowdown in the electric vehicle (EV) market is also expected to affect supply growth as some plants designed to make batteries for vehicles shift to producing battery cells for power grids.

Higher costs may be unavoidable. Batteries produced in the United States are still far more expensive than Chinese-made products, and importing from other countries such as South Korea is also likely to cost more than Chinese-made products.

The issue is not limited to the United States or the battery industry. China is ahead of other countries in several energy technologies, including solar panels and batteries. That is because years of government support and experience in research and manufacturing have helped it secure strong competitiveness in the energy industry.

Countries face the task of reducing dependence on a specific country for core technologies while using affordable technologies to cut emissions and energy costs. The U.S. push to cut reliance on Chinese-made batteries is also being pursued within that balance.